Seattle Times gets a gift from Olympia
In January, a Seattle Times editorial predicted the tough legislative session would produce "audible ouches and shrieks reflecting the pain of a thousand budget cuts." But at the Times, the state dominant newspaper company which is itself enduring financial setbacks, the sound you might hear is a squeal of joy.
Governor Christine Gregoire just signed into law a tax break for the state's newspapers, slashing their share of B&O tax by about 40 percent, the same kind of favor doled out to other powerful industrial sectors in the state. Small businesses and entrepreneurs don't usually get such help, but everyone knows that you're nobody unless you have your own Olympia-approved tax break or loophole, just like Boeing or Microsoft.
So while the state's teachers and poor lose their jobs and get kicked off basic health care, the Times and other papers are getting a little relief, a gift that made balancing the budget tougher.
According to the fiscal impact of the law, produced by the state Office of Financial Management, the "newspaper industry B&O tax" bill will cost $1.2 million this year, $1.3 million next year, and a total of nearly $8 million through 2015 (assuming there are still newspapers). At a time when the state needs more revenue, it'll get millions less.
On top of that, the tax cut also has a cost. OFM's fiscal note, using figures provided by the Department of Revenue, indicate that the newspaper's B&O break will actually cost an additional $22,500 to implement and administer this year, and a total of about $42,500 through 2015. So not only is the state decreasing its revenue, it is increasing, however slightly, its administrative costs. At the very least, it's increasing the workload for staffers.
So how does this square with the Times' own editorials on the state's budget crisis? The newspaper has argued against tax increases and a state income tax saying these strain the pocketbooks of the common citizen. Its philosophy about the budget has been simple. In an editorial in February, the Times declared that when it came to expenses "the state must cut, cut, cut."
In another editorial, they declared: "Efficiency will be the watchword. Lawmakers will have to find numerous savings and new, less expensive ways to do business."
By those standards, the newspaper B&O tax break does not meet the Times' test. It cuts revenues, making the budget hole deeper by millions of dollars, and it increases administrative costs. That is not greater "efficiency," it does not create a "savings," and it is neither a "new" way of doing business in Olympia nor is it "less expensive."
Comments:
Posted Thu, May 14, 6:51 a.m. inappropriate
It doesn't create jobs, it means that higher education programs will have to be cut, and it means less state services. But what is worse to me, is that it turns the press into another industry siphoning off resources from the state. Not only that, but it shows the impact of the new monopolist Seattle Times empire is having on the state. Need I note the Blethen empire buried this story with four paragraphs back on the Metro section. We now have a monopoly suppressing news that state residents need to know. Where was the press when this measure was going through the legislature, and why are we only finding out about it when it is signed into law?
Posted Thu, May 14, 8:33 a.m. inappropriate
some of the points were valid, in my view, but I'd offer several dissenting points to consider:
1. It isn't just The Times' tax relief, for Pete's sake, but for all newspapers within the state. I know many love to whack at the Times and preceived inconsistence on the tax-and-cut question, but some other papers, including my old employer, The Columbian, in Vancouver are going through really tough times. Many others are getting skimpier, and most of the eyeballs are heading to the (free) websites. Not a great, sustainable business model.
2. A million bucks a year is budget dust, a rounding error in a $35 billion budget. Perspective, people! And if the tax reduction hadn't passed, I seriously doubt if a single dime would have been added to health care or education or anything else.
3. The national analysis I'm reading these days generally suggests, after describing all the ways the newspaper industry was asleep at the switch and too seduced by Wall Street billions and cost-saving demands, is that public tax policy should reflect our country's interest in a free and unfettered press. However flawed, it's one of the few checks on government and other centers of power. References are made to the founders' acknowledgement of the press role in self-government, including, yes, tax treatment and reduced postal rates. The blogosphere can be helpful, but we still need a cadre of professional question-askers and shin-kickers, regardless of the platform for publishing. Newspapers, or maybe I should say journalism, are still foundational.
Posted Thu, May 14, 8:56 a.m. inappropriate
I appreciate Dave's comments, and no one should minimize his point about "our country's interest in a free and unfettered press."
But in this case, we are rewarding the publishers of the Times and the Columbian for bad, stupid, shortsighted, and just plain greedy business decisions. Nobody should forget the Columbian's spanking new "flagship" building, soon abandoned, or the Times spending $20 million to provoke and prosecute a strike it could have settled for $2 million, and Blethen's hegemonic and ill-advised purchase of the Maine newspapers.
If this tax break were to translate somehow into more and better coverage of the news -- Olympia, anyone? We miss you, Dave -- that would be one thing. Instead it will pay for the lifestyles of the rich and famous, and to support nonproductive, superfluous layers of management, who will keep those pesky damn unions in their place.
I'm not real happy with this tax break, but it was pretty well reported during the legislative process.
Posted Thu, May 14, 1:07 p.m. inappropriate
Bought And Paid For!!! Gratitude to Olympia will now be accepted.
Pulitzer must be rolling in his grave about now.
Posted Thu, May 14, 2:25 p.m. inappropriate
Ammons, I can think of many organizations and people who could use that "budget dust"...
Posted Fri, May 15, 9:27 a.m. inappropriate
Set aside your feelings about Blethen. How about Spokane, Wenatchee, Bellingham, Tri-Cities, etc.? Every newspaper in the state is hurting and could use this small break. Smaller cities in particular will be hurt if they lose their local paper. There's nobody to fill that role.
The Times, being the most influential, led this fight, but is far from the only beneficiary.
Posted Fri, May 15, 9:44 a.m. inappropriate
Re Benjamin Lukoff's post -- me, too. I'm involved in local nonprofits, tent city, the heritage community, church work, etc. But it's really a false choice. If the tax relief bill hadn't passed, i'm quite certain the budgetwriters wouldn't have added a single penny to appropriations. Separate decisions by different committees. Re the tax break, it certainly doesn't all by itself save any newspaper in Washington state. But it is a way to say with our tax policy that we as a citizenry value this particular private business because of its public benefit. We certainly do plenty for just about every industry and business in Washington. It's part of our social contract, I guess, to benefit and promote the private sector because they hire people, keep the economy going and hopefully provide other social benefit, as I assert that newspapers do. If newspapers dry up and blow away, I will be sad. True, I will (as I already have) find lots of good stuff on the net every day, but we'll all need good reliable information, preferrably reported and written by folks with the time and skills and financial freedom to do the seattime in Oly and elsewhere and to do the digging, interviewing and cogitating. I find this an exciting and scary time. Change is afoot, and I am trying to embrace it.
Posted Fri, May 15, 11:27 a.m. inappropriate
City council supported this bill in Oly, and now on the same day they get their law the Times of Seattle editorialized against the idea of having some 4 or 5) council members elected by a given section of the city.
Why break up a good thing? They get what they want, Paul Allen of Medina gets whatever, and the people on the fringes of the land are on the fringes of democracy, and the fourth estate.
Posted Fri, May 15, 2:16 p.m. inappropriate
This just shows why the B&O; tax must go. As more and more businesses are granted exemptions, it becomes a government tool for punishing disfavored sectors of the economy. Get government out of the game of picking winners and losers. Eliminate this burdensome tax.
Posted Fri, May 15, 5:21 p.m. inappropriate
And replace the revenue with?
Posted Fri, May 15, 6:46 p.m. inappropriate
Knute,
A fine piece here.
Putting aside the issue of the tax break, your piece raised a question in my mind. How did the Legislature define "a newspaper?"
That struck me as a tricky matter since the definition of a "journalist" has been litigated in libel matters and "journalist" has been debated when certain online-only bloggers want entry into press briefings or free seats for sports writers at Safeco Field.
So what is a "newspaper." Can a newsy blog whose author earns any income qualify for the tax break?
What is a "newspaper" when the Seattle P-I reports on Olympia in online-only form?
Does Crosscut get a tax break on its massive profits and the cost of maintaining its on-demand news chopper?
So I looked up the bill that provides this tax break and, help me if I miss it, but I don't see a clear definition. I do see wording that seems to define newspaper as something that is "printed" or "published."
The bill is found at this web link:
http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2122&year;=2009
Here's some of the wording:
3 "(14) Upon every person engaging within this state in the business
4 of printing or publishing weekly, semimonthly, or monthly newspapers,
5 the amount of tax on such business is equal to the gross income of the
6 business multiplied by the rate of 0.2904 percent."
7 On page 8, beginning on line 16, after "(1)" strike "Printing
8 materials other than newspapers, and of publishing ((newspapers,))
9 periodicals((,)) or magazines;" and insert "Printing, and of publishing
10 newspapers, periodicals, or magazines, except printing or publishing
11 newspapers described in RCW 82.04.260(14);"
EFFECT: Restricts lower tax rate to printing or publishing
weekly, semimonthly, and monthly newspapers.
Posted Fri, May 15, 7:36 p.m. inappropriate
I am no help, but this would not be the first online publication to print a digest of its reporting in order to gain "press" access.
Hello tax break!
Hello SeattlePI.com "news" letter?
Posted Sat, May 16, 8:53 a.m. inappropriate
Mr. Baker asks: "And replace the revenue with?"
The B&O; tax, the property tax and the sales tax should all be eliminated and replaced with a flat rate income tax on individuals and companies. But no income tax unless the other three are completely eliminated as part of the deal. Let people know up front and unambiguously how much government is costing them, and require them to pay their fare share based on their ability to pay. The sales and property taxes, and to some extent the B&O; tax, are not based on the taxed party's ability to pay. An income tax is. Problem solved.
Posted Sat, May 16, 4:04 p.m. inappropriate
According to "bigyaz" we should "set aside our feelings about Blethen." I might be willing to do that if his incompetence hadn't put the state's largest newspaper, which was self-sustaining and heavily in the black before he became publisher, into a state of unsustainable debt.
The Times would have been in a far better position to ride out the systemic woes that are plaguing the industry if Frank hadn't been spending money like a drunken sailor, mostly to feed his own ego.
David Ammons and others have made a colorable argument that it is sound public policy to ensure a "free and unfettered press," and even though defining that statement admits to several interpretations, part of me agrees with it.
Another part of me, however, recoils in disgust againt my tax dollars rewarding such manfest incompetence. I guess we're just supposed to "set that aside." I don't think so.
Posted Sat, May 16, 8:40 p.m. inappropriate
dbreneman, how do we convince people to pull money out of a general state fund for local city tourist capital investment and promotion?
The sales tax is not uniform now for reasons local jurisdictions have decided on.
You and Lisa Brown need to figure that one out first before floating that idea again.
Posted Sat, May 16, 9:45 p.m. inappropriate
I would rather that the state had taken the equivalent amount of money of the tax cut and instead created a state fund for the purchase of daily and weekly newspapers. Those newspapers purchased would be put into not-for-profit trusts and pay back the state over an appropriate length of time. In other words, I'm proposing the creation of a revolving loan fund that, over time, would have the potential to take a goodly chunk of the state's newspapers out of the hands of plutocrats and into the hands of not-for-profit entities dedicated to quality journalism. The model for this is the St. Petersburg Times, which is owned by the not-for-profit Poynter Institute.
A corporate structure that isn't built around unsustainably high profit margins will not, in and of itself, save newspapers from the electronic revolution. However, it could keep alive newspapers that might otherwise be shut down or consolidated because their profit levels did not live up to Wall Street expectations.
Dave, would you support this idea?
Posted Sun, May 17, 1:34 p.m. inappropriate
Mr Baker, there's no reason that local entities can't "latch on" to the income tax just as they do the sales tax today. By "flat rate" I mean a tax that's not indexed to to income. But the people of this state are not going to accept an income tax as "just another tax." It must be part of a wholesale tax reform program which totally eliminates other taxes, for the simple and obvious reason that any tax that is lowered can be raised again.
The government should be kept as far away from the press as possible. The whole strength of a free press is that it is not comprised of a special class of citizens! The press is anyone who can publish or broadcast. Once you establish special protection for the "old press" you establish a caste system, with an elite group and a disfavored group. When any element of the press stops being "regular people" press freedom is lost, because the government is the gatekeeper to "privileged press" status. Those who grant status will eventually seek something in return.